SINGAPORE: Japanese rubber futures retreated on Tuesday, as lacklustre economic recovery in Japan and China pulled down trader sentiment, although a surge in crude prices lent some support to the market.
The Osaka Exchange (OSE) rubber contract for September delivery was down 4.3 yen, or 2%, at 209.5 yen ($1.58) per kg, as of 0201 GMT. The rubber contract on the Shanghai futures exchange (SHFE) for May delivery was down 245 yuan, or 2%, at 11,765 yuan ($1,709.11) per tonne.
Japan’s benchmark Nikkei average opened flat. Japan’s largest auto manufacturer, Toyota Motor Corp, reported a drop in quarterly US auto sales on Monday, as it struggled to get enough cars and trucks to dealers due to inflationary pressures and chip shortages.
Japanese manufacturers’ sentiment soured in the first quarter to its worst level in more than two years, a central bank survey showed, reinforcing views a strong post-COVID economic recovery is some time away. Similarly, China’s sprawling manufacturing sector lost momentum in March as weak export orders outweighed a jump in activity, driven by a recent exit from restrictive COVID-19 policies. Still, oil prices steadied in early Asian trade on Tuesday after OPEC+ decision to cut more production jolted markets the previous day.
The natural rubber market is helped by stronger oil prices as manufacturers are incentivised to shift away from synthetic rubber that is derived from oil, driving natural rubber prices higher.
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